a02411.htm

__________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
  
X
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the Quarterly Period Ended March 31, 2011
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from ____________ to ____________

 
Commission
File Number
Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, Telephone
Number, and IRS Employer Identification No.
  
 
Commission
File Number
Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, Telephone
Number, and IRS Employer Identification No.
1-11299
ENTERGY CORPORATION
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
72-1229752
  
1-31508
ENTERGY MISSISSIPPI, INC.
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
64-0205830
         
         
1-10764
ENTERGY ARKANSAS, INC.
(an Arkansas corporation)
425 West Capitol Avenue
Little Rock, Arkansas 72201
Telephone (501) 377-4000
71-0005900
  
0-05807
ENTERGY NEW ORLEANS, INC.
(a Louisiana corporation)
1600 Perdido Street
New Orleans, Louisiana 70112
Telephone (504) 670-3700
72-0273040
         
         
0-20371
ENTERGY GULF STATES LOUISIANA, L.L.C.
(a Louisiana limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
74-0662730
  
1-34360
ENTERGY TEXAS, INC.
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 981-2000
61-1435798
         
         
1-32718
ENTERGY LOUISIANA, LLC
(a Texas limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
75-3206126
  
1-09067
SYSTEM ENERGY RESOURCES, INC.
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
72-0752777
         

__________________________________________________________________________________________


Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes þ No o

Indicate by check mark whether Entergy Corporation has submitted electronically and posted on Entergy's corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No o

Indicate by check mark whether Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy Resources have submitted electronically and posted on Entergy's corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).  Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.

 
Large
accelerated
filer
  
 
Accelerated
filer
  
Non-
accelerated
filer
  
Smaller
reporting
company
Entergy Corporation
Ö
            
Entergy Arkansas, Inc.
        
Ö
    
Entergy Gulf States Louisiana, L.L.C.
        
Ö
    
Entergy Louisiana, LLC
        
Ö
    
Entergy Mississippi, Inc.
        
Ö
    
Entergy New Orleans, Inc.
        
Ö
    
Entergy Texas, Inc.
        
Ö
    
System Energy Resources, Inc.
        
Ö
    

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No þ

Common Stock Outstanding
  
Outstanding at April 29, 2011
Entergy Corporation
($0.01 par value)
177,967,942

Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q.  Information contained herein relating to any individual company is filed by such company on its own behalf.  Each company reports herein only as to itself and makes no other representations whatsoever as to any other company.  This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2010, filed by the individual registrants with the SEC, and should be read in conjunction therewith.



ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2011

 
Page Number
   
iv
vi
Entergy Corporation and Subsidiaries
  
Management's Financial Discussion and Analysis
  
1
4
8
9
11
11
11
13
14
16
18
19
20
54
Entergy Arkansas, Inc. and Subsidiaries
  
Management's Financial Discussion and Analysis
  
55
56
58
58
58
58
58
59
61
62
64
65
Entergy Gulf States Louisiana, L.L.C.
  
Management's Financial Discussion and Analysis
  
66
67
68
69
69
69
69
70
71
72
74
75
   


ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2011

 
Page Number
   
Entergy Louisiana, LLC
  
Management's Financial Discussion and Analysis
  
76
77
80
80
80
80
80
81
83
84
86
87
Entergy Mississippi, Inc.
  
Management's Financial Discussion and Analysis
  
88
89
91
91
91
92
93
94
96
97
Entergy New Orleans, Inc.
  
Management's Financial Discussion and Analysis
  
98
99
100
100
100
100
101
103
104
106
107
   


ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2011

 
Page Number
   
Entergy Texas, Inc. and Subsidiaries
  
Management's Financial Discussion and Analysis
  
108
109
111
111
111
111
112
113
114
116
117
System Energy Resources, Inc.
  
Management's Financial Discussion and Analysis
  
118
118
120
120
120
121
123
124
126
Part II.  Other Information
  
127
127
127
128
131
133




FORWARD-LOOKING INFORMATION

In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance.  Such statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "may," "will," "could," "project," "believe," "anticipate," "intend," "expect," "estimate," "continue," "potential," "plan," "predict," "forecast," and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements.  Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct.  Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made.  Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties.  There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K, (b) Management's Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):

·  
resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, and other regulatory proceedings, including those related to Entergy's System Agreement or any successor agreement or arrangement, Entergy's utility supply plan, recovery of storm costs, and recovery of fuel and purchased power costs
·  
changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, the operations of the independent coordinator of transmission for Entergy's utility service territory and transition to a successor or alternative arrangement, including possible participation in a regional transmission organization, and the application of more stringent transmission reliability requirements or market power criteria by the FERC
·  
changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those owned or operated by the Entergy Wholesale Commodities business, and the effects of new or existing safety concerns regarding nuclear power plants and nuclear fuel
·  
resolution of pending or future applications for license renewals or modifications of nuclear generating facilities
·  
the performance of and deliverability of power from Entergy's generation resources, including the capacity factors at its nuclear generating facilities
·  
Entergy's ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities
·  
prices for power generated by Entergy's merchant generating facilities, the ability to hedge, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Entergy Wholesale Commodities nuclear plants,
·  
the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy's ability to meet credit support requirements for fuel and power supply contracts
·  
volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities
·  
changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation
·  
changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, mercury, and other substances, and changes in costs of compliance with environmental and other laws and regulations




FORWARD-LOOKING INFORMATION (Concluded)

·  
uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal
·  
variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes and ice storms and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance
·  
effects of climate change
·  
Entergy's ability to manage its capital projects and operation and maintenance costs
·  
Entergy's ability to purchase and sell assets at attractive prices and on other attractive terms
·  
the economic climate, and particularly economic conditions in Entergy's Utility service territory and the Northeast United States and events that could influence economic conditions in those areas
·  
the effects of Entergy's strategies to reduce tax payments
·  
changes in the financial markets, particularly those affecting the availability of capital and Entergy's ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions
·  
actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies' ratings criteria
·  
changes in inflation and interest rates
·  
the effect of litigation and government investigations or proceedings
·  
advances in technology
·  
the potential effects of threatened or actual terrorism and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion
·  
Entergy's ability to attract and retain talented management and directors
·  
changes in accounting standards and corporate governance
·  
declines in the market prices of marketable securities and resulting funding requirements for Entergy's defined benefit pension and other postretirement benefit plans
·  
changes in decommissioning trust fund values or earnings or in the timing of or cost to decommission nuclear plant sites
·  
factors that could lead to impairment of long-lived assets
·  
the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture



DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:
 
Abbreviation or Acronym
 
 
Term
AEEC
Arkansas Electric Energy Consumers
AFUDC
Allowance for Funds Used During Construction
ALJ
Administrative Law Judge
ANO 1 and 2
Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC
Arkansas Public Service Commission
Board
Board of Directors of Entergy Corporation
capacity factor
Actual plant output divided by maximum potential plant output for the period
City Council or Council
Council of the City of New Orleans, Louisiana
Entergy
Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation
Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.
Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana
Entergy Gulf States Louisiana, L.L.C., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes.  The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Texas
Entergy Texas, Inc., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc.  The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Wholesale
Commodities
Entergy’s non-utility business segment primarily comprised of the ownership and operation of six nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by those plants to wholesale customers
  
EPA
United States Environmental Protection Agency
ERCOT
Electric Reliability Council of Texas
FASB
Financial Accounting Standards Board
FERC
Federal Energy Regulatory Commission
firm LD
Transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, the defaulting party must compensate the other party as specified in the contract
FitzPatrick
James A. FitzPatrick Nuclear Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Form 10-K
Annual Report on Form 10-K for the calendar year ended December 31, 2010 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
Grand Gulf
Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy
GWh
Gigawatt-hour(s), which equals one million kilowatt-hours
Independence
Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power
Indian Point 2
Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Indian Point 3
Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
IRS
Internal Revenue Service


DEFINITIONS (Continued)

Abbreviation or Acronym
 
Term
ISO
Independent System Operator
kW
Kilowatt, which equals one thousand watts
kWh
Kilowatt-hour(s)
LPSC
Louisiana Public Service Commission
MISO
Midwest Independent Transmission System Operator, Inc.
MMBtu
One million British Thermal Units
MPSC
Mississippi Public Service Commission
MW
Megawatt(s), which equals one thousand kilowatts
MWh
Megawatt-hour(s)
Net MW in operation
Installed capacity owned and operated
NRC
Nuclear Regulatory Commission
NYPA
New York Power Authority
Offsetting positions
Transactions for the purchase of energy, generally to offset a firm LD transaction
Palisades
Palisades Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Pilgrim
Pilgrim Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
PPA
Purchased power agreement
PUCT
Public Utility Commission of Texas
Registrant Subsidiaries
Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend
River Bend Station (nuclear), owned by Entergy Gulf States Louisiana
RTO
Regional transmission organization
SEC
Securities and Exchange Commission
SPP
Southwest Power Pool
System Agreement
Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources
System Energy
System Energy Resources, Inc.
TWh
Terawatt-hour(s), which equals one billion kilowatt-hours
unit-contingent
Transaction under which power is supplied from a specific generation asset; if the asset is not operating, the seller is generally not liable to the buyer for any damages
Unit Power Sales Agreement
Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf
Utility
Entergy's business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies
Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Vermont Yankee
Vermont Yankee Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Waterford 3
Unit No. 3 (nuclear) of the Waterford Steam Electric Station, 100% owned or leased by Entergy Louisiana
weather-adjusted usage
Electric usage excluding the effects of deviations from normal weather



ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS


Entergy operates primarily through its two, reportable, operating segments: Utility and Entergy Wholesale Commodities.

·  
Utility generates, transmits, distributes, and sells electric power in service territories in four states that include portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business.
·  
The Entergy Wholesale Commodities business segment includes the ownership and operation of six nuclear power plants located in the northern United States and the sale of the electric power produced by those plants to wholesale customers.  This business also provides services to other nuclear power plant owners.  Entergy Wholesale Commodities also owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers while it focuses on improving operating and financial performance of these plants, consistent with Entergy’s market-based point-of-view.

In the fourth quarter 2010, Entergy finished integrating its former Non-Utility Nuclear business segment and its non-nuclear wholesale asset business into the new Entergy Wholesale Commodities business in an internal reorganization.  The prior period financial information in this Form 10-Q has been restated to reflect the change in reportable segments.

Results of Operations

Income Statement Variances

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the first quarter 2011 to the first quarter 2010 showing how much the line item increased or (decreased) in comparison to the prior period:

   
 
 
Utility
  
Entergy
Wholesale Commodities
  
 
Parent &
Other (1)
  
 
 
Entergy
   
(In Thousands)
                 
1st Qtr 2010 Consolidated Net Income
  
$142,971 
  
$90,542 
  
($14,699)
  
$218,814 
                 
Net revenue (operating revenue less fuel
  expense, purchased power, and other
  regulatory charges/credits)
  
 
 
18,241 
  
 
 
(40,141)
  
 
 
224 
  
 
 
(21,676)
Other operation and maintenance expenses
  
13,033 
  
(50,554)
  
(9,220)
  
(46,741)
Taxes other than income taxes
  
(6,239)
  
(3,454)
  
(485)
  
(10,178)
Depreciation and amortization
  
(6,942)
  
2,718 
  
(95)
  
(4,319)
Other income
  
(747)
  
(23,487)
  
(2,112)
  
(26,346)
Interest expense
  
(8,892)
  
(47,198)
  
12,492 
  
(43,598)
Other expenses
  
618 
  
4,768 
  
(1)
  
5,385 
Income taxes
  
234 
  
(2,599)
  
18,930 
  
16,565 
                 
1st Qtr 2011 Consolidated Net Income
  
$168,653 
  
$123,233 
  
($38,208)
  
$253,678 

(1)
Parent & Other includes eliminations, which are primarily intersegment activity.
 

 
1
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the first quarter 2011 to the first quarter 2010.

  
  
Amount
  
  
(In Millions)
     
2010 net revenue
  
$1,130 
Retail electric price
  
18 
Volume/weather
  
11 
Net gas revenue
  
(6)
Other
  
(5)
2011 net revenue
  
$1,148 

The retail electric price variance is primarily due to a base rate increase at Entergy Arkansas effective July 2010 and rate actions at Entergy Texas, including a base rate increase effective August 2010.  This was partially offset by a formula rate plan decrease at Entergy New Orleans effective October 2010.  See Note 2 to the financial statements in the Form 10-K for further discussion of these proceedings.

The volume/weather variance is primarily due to an increase of 911 GWh in weather-adjusted usage in the residential and industrial sectors.  Despite favorable weather in first quarter 2011, the weather effect declined compared to the near-record-setting cold weather experienced in the first quarter 2010.  Weather-adjusted residential retail sales growth reflected both an increase in the number of customers as well as higher usage per customer.  Industrial sales have realized sustained growth since the beginning of 2010 and the first quarter 2011 continued the trend.  Entergy’s service territory has benefitted from the national manufacturing economy as well as industrial facility expansions.  Industrial customers in Entergy’s service territory also have benefitted from the need to re-stock inventory and export trends.

The net gas revenue variance is primarily due to milder weather as compared to last year.

Entergy Wholesale Commodities

Following is an analysis of the change in net revenue comparing the first quarter 2011 to the first quarter 2010.

  
  
Amount
  
  
(In Millions)
     
2010 net revenue
  
$565 
Volume
  
(19)
Realized price changes
  
(13)
Other
  
(8)
2011 net revenue
  
$525 

As shown in the table above, net revenue for Entergy Wholesale Commodities decreased by $40 million, or 7%, in the first quarter 2011 compared to the first quarter 2010 primarily due to lower volume resulting from an increase in forced outages for Entergy Wholesale Commodities’ nuclear fleet in 2011 and lower pricing in its contracts to sell power.  Included in net revenue is $11 million and $12 million of amortization of the Palisades purchased power agreement in the first quarters 2011 and 2010, respectively, which is non-cash revenue and is discussed in Note 15 to the financial statements in the Form 10-K.  Included in Other in the table above is a decrease of $5 million in net revenue from the Harrison County plant, which was sold in December 2010.
 
 
2
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Following are key performance measures for Entergy Wholesale Commodities’ nuclear plants for the first quarter 2011 and 2010:

   
2011
  
2010
         
Net MW in operation at March 31
  
4,998
  
4,998
Average realized revenue per MWh
  
$57.46
  
$58.72
GWh billed
  
9,913
  
10,255
Capacity factor
  
91%
  
94%
Refueling Outage Days:
        
Indian Point 2
  
-
  
22
Indian Point 3
  
23
  
-

Overall, including its non-nuclear plants, Entergy Wholesale Commodities billed 10,519 GWh in the first quarter 2011 and 11,128 GWh in the first quarter 2010, with average realized revenue per MWh of $56.98 in the first quarter 2011 and $58.31 in the first quarter 2010.

Realized Price per MWh

See the Form 10-K for a discussion of Entergy Wholesale Commodities nuclear business’s realized price per MWh, including the factors that influence it and the decrease in the annual average realized price per MWh to $59.16 in 2010 from $61.07 for 2009.  Entergy Wholesale Commodities’ nuclear business is almost certain to experience a decrease again in 2011 because, as shown in the contracted sale of energy table "Market and Credit Risk Sensitive Instruments," Entergy Wholesale Commodities has sold forward 96% of its planned nuclear energy output for the remainder of 2011 for an average contracted energy price of $53 per MWh.  In addition, Entergy Wholesale Commodities has sold forward 87% of its planned nuclear energy output for 2012 for an average contracted energy price of $49 per MWh.

Other Income Statement Items

Utility

Other operation and maintenance expenses increased from $435 million for the first quarter 2010 to $448 million for the first quarter 2011 primarily due to:

·  
an increase of $6 million in transmission and distribution expenses primarily due to vegetation and maintenance expenses;
·  
an increase of $4 million in nuclear expenses primarily due to higher labor costs;
·  
an increase of $3 million in legal expenses primarily resulting from the U.S. Department of Justice investigation that is discussed in “U.S. Department of Justice Investigation” in the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K; and
·  
several individually insignificant items.

These increases were partially offset by a decrease of $7 million in fossil expenses resulting from more outages in first quarter 2010 and an increase of $6 million in nuclear insurance refunds received in 2011 as compared to the same period in 2010.


 
3
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Depreciation and amortization expenses decreased primarily due to a decrease in depreciation rates at Entergy Arkansas as a result of the rate case settlement agreement approved by the APSC in June 2010.

Entergy Wholesale Commodities

           Other operation and maintenance expenses decreased from $260 million for the first quarter 2010 to $209 million for the first quarter 2011 primarily due to:

·  
the write-off of $32 million of capital costs in first quarter 2010, primarily for software that will not be utilized, in connection with Entergy's decision to unwind the infrastructure created for the planned spin-off of its non-utility nuclear business; and
·  
a decrease of $6 million due to the absence of expenses from the Harrison County plant which was sold in the fourth quarter 2010.

Other income decreased primarily due to a decrease of $11 million in realized earnings on decommissioning trust fund investments and a decrease in interest income earned on loans to the parent company, Entergy Corporation.

Interest expense decreased primarily due to the write-off of $37 million of debt financing costs in the first quarter 2010, primarily incurred for a $1.2 billion credit facility that will not be used, in connection with Entergy's decision to unwind the infrastructure created for the planned spin-off of its non-utility nuclear business.

Parent & Other

Interest expense increased primarily due to $1 billion of Entergy Corporation notes payable issued in September 2010 with the proceeds used to pay down the borrowings outstanding on Entergy Corporation’s revolving credit facility, which were at a lower interest rate.

Income Taxes

The effective income tax rates for the first quarters 2011 and 2010 were 39.3% and 40.3%, respectively.  The difference in the effective income tax rate versus the statutory rate of 35% for the first quarter 2011 is primarily due to state income taxes and certain book and tax differences for utility plant items.  The difference in the effective income tax rate versus the statutory rate of 35% for the first quarter 2010 is primarily due to:

·  
a charge of $16 million recorded in first quarter 2010 resulting from a change in tax law associated with the federal healthcare legislation enacted in March 2010.  See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K for a discussion of the federal healthcare legislation; and
·  
state income taxes and certain book and tax differences for utility plant items.

These factors were partially offset by:

·  
a $19 million tax benefit recorded first quarter 2010 in connection with Entergy's decision to unwind the infrastructure created for the planned spin-off of its non-utility nuclear business; and
·  
book and tax differences related to the allowance for equity funds used during construction.

Liquidity and Capital Resources

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy's capital structure, capital expenditure plans and other uses of capital, and sources of capital.  Following are updates to that discussion.


 
4
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Capital Structure

Entergy's capitalization is balanced between equity and debt, as shown in the following table.

   
March 31,
2011
  
December 31,
2010
         
Debt to capital
  
57.6%
  
57.3%
Effect of excluding the Arkansas and Texas securitization bonds
  
(1.9)%
  
(2.0)%
Debt to capital, excluding securitization bonds (1)
  
55.7%
  
55.3%
Effect of subtracting cash
  
(1.7)%
  
(3.2)%
Net debt to net capital, excluding securitization bonds (1)
  
54.0%
  
52.1%

  (1)
Calculation excludes the Arkansas and Texas securitization bonds, which are non-recourse to Entergy Arkansas and Entergy Texas, respectively.

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, common shareholders' equity, and subsidiaries' preferred stock without sinking fund.  Net capital consists of capital less cash and cash equivalents. Entergy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy's financial condition.

As discussed in the Form 10-K, Entergy Corporation has in place a revolving credit facility that expires in August 2012.  Entergy Corporation has the ability to issue letters of credit against the total borrowing capacity of the facility.  As of March 31, 2011, the capacity and amounts outstanding under the credit facility are:

 
Capacity
  
 
Borrowings
  
Letters
of Credit
  
Capacity
Available
(In Millions)
             
$3,465 
  
$1,727 
  
$25 
  
$1,713

Entergy Corporation's credit facility requires it to maintain a consolidated debt ratio of 65% or less of its total capitalization.  The calculation of this debt ratio under Entergy Corporation's credit facility and in one of the indentures governing the Entergy Corporation senior notes is different than the calculation of the debt to capital ratio above.  Entergy is currently in compliance with this covenant.  If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility's maturity date may occur, and there may be an acceleration of amounts due under certain Entergy Corporation senior notes.

See Note 4 to the financial statements herein for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries' credit facilities.

Capital Expenditure Plans and Other Uses of Capital

See the table and discussion in the Form 10-K under "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital," that sets forth the amounts of planned construction and other capital investments by operating segment for 2011 through 2013.  Following are updates to the discussion in the Form 10-K.


 
5
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Acadia Unit 2 Purchase Agreement

See the Form 10-K for a discussion of the agreement Entergy Louisiana signed to acquire Unit 2 of the Acadia Energy Center, a 580 MW generating unit located near Eunice, La., from Acadia Power Partners, LLC, an independent power producer.  Entergy Louisiana acquired the plant on April 29, 2011.

Summer 2009 Long-Term Request for Proposal

As discussed in the Form 10-K, the construction or purchase of three resources identified in the Summer 2009 Long-Term Request for Proposal were included in the 2011-2013 capital expenditure estimates in the Form 10-K.  In addition to the self-build option at Entergy Louisiana’s Ninemile site noted in the Form 10-K, in April 2011 two Entergy Utility operating companies announced that they have signed agreements to acquire the other two resources, the 620 MW Hot Spring Energy facility and the 450 MW Hinds Energy Facility.

Hot Spring Energy Facility Purchase Agreement

In April 2011, Entergy Arkansas announced that it has signed an asset purchase agreement to acquire the Hot Spring Energy Facility, a 620 MW natural gas-fired combined-cycle turbine plant located in Hot Spring County, Arkansas, from a subsidiary of KGen Power Corporation.  The purchase price is approximately $253 million.  Entergy Arkansas also expects to invest in various plant upgrades at the facility after closing and expects the total cost of the acquisition to be approximately $277 million.  The acquisition is expected to require investment in Entergy’s transmission system, and studies are currently under way to estimate the cost.  The purchase is contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from various federal and state regulatory and permitting agencies.  These include regulatory approvals from the APSC and FERC, as well as clearance under the Hart-Scott-Rodino anti-trust law.  Because Hot Spring represents a substantial portion of KGen Power’s remaining assets, Delaware law requires KGen Power to obtain shareholder approval prior to selling the Hot Spring facility.  KGen Power intends to mail a proxy to its stockholders with a vote expected to be held in mid-June 2011.  Closing is expected to occur in mid-2012.  Entergy Arkansas expects to initiate its request for approval for the acquisition and cost recovery from the APSC in June 2011.

Hinds Energy Facility Purchase Agreement

In April 2011, Entergy Mississippi announced that it has signed an asset purchase agreement to acquire the Hinds Energy Facility, a 450 MW natural gas-fired combined-cycle turbine plant located in Jackson, Mississippi, from a subsidiary of KGen Power Corporation.  The purchase price is approximately $206 million.  Entergy Mississippi also expects to invest in various plant upgrades at the facility after closing and expects the total cost of the acquisition to be approximately $246 million.  The acquisition is expected to require investment in Entergy’s transmission system, and studies are currently under way to estimate the cost.  The purchase is contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from various federal and state regulatory and permitting agencies.  These include regulatory approvals from the MPSC and FERC, as well as clearance under the Hart-Scott-Rodino anti-trust law.  Because Hinds represents a substantial portion of KGen Power’s remaining assets, Delaware law requires KGen Power to obtain shareholder approval prior to selling the Hinds facility.  KGen Power intends to mail a proxy to its stockholders with a vote expected to be held in mid-June 2011.  Closing is expected to occur in mid-2012.  Entergy Mississippi expects to initiate its request for approval for the acquisition and cost recovery from the MPSC in Summer 2011.

Waterford 3 Steam Generator Replacement Project

See the Form 10-K for a discussion of the Waterford 3 Steam Generator Replacement project.  With regard to the delay in the delivery of the steam generators, Entergy Louisiana is working with the manufacturer to fully develop and evaluate repair options.  Extensive inspections of the existing steam generators at Waterford 3 in cooperation with the manufacturer were completed in April 2011.  The review of data obtained during these inspections supports the conclusion that Waterford 3 can operate safely for another full cycle before the replacement of the existing steam generators.  Entergy Louisiana is required to report its findings to the NRC through a report made 180
 
 
6
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

days after plant start up.  At this time, a requirement to perform a mid-cycle outage for further inspections in order to allow the plant to continue operation until its Fall 2012 refueling outage is not anticipated.  Entergy Louisiana expects to file a special LPSC monitoring report in second quarter 2011 that will reflect the updated project cost and schedule.  Entergy Louisiana also expects to resume the revenue requirement proceeding before the LPSC in Fall 2012.  Entergy Louisiana currently expects the cost of the project, including carrying costs, to increase to approximately $687 million if the replacement occurs during the Fall 2012 refueling outage.

Dividends and Stock Repurchases

Declarations of dividends on Entergy’s common stock are made at the discretion of the Board.  Among other things, the Board evaluates the level of Entergy’s common stock dividends based upon Entergy’s earnings, financial strength, and future investment opportunities.  At its January and April 2011 meetings, the Board declared dividends of $0.83 per share, which is the same quarterly dividend per share that Entergy has paid since second quarter 2010.

Cash Flow Activity

As shown in Entergy's Consolidated Statements of Cash Flows, cash flows for the three months ended March 31, 2011 and 2010 were as follows:

   
2011
  
2010
   
(In Millions)
         
Cash and cash equivalents at beginning of period
  
$1,294 
  
$1,710 
         
Cash flow provided by (used in):
        
Operating activities
  
323 
  
674 
Investing activities
  
(897)
  
(515)
Financing activities
  
6 
  
(212)
Net decrease in cash and cash equivalents
  
(568)
  
(53)
         
Cash and cash equivalents at end of period
  
$726 
  
$1,657 

Operating Activities

Entergy's cash flow provided by operating activities decreased by $351 million for the three months ended March 31, 2011 compared to the three months ended March 31, 2010, primarily due to an increase of $147 million in pension contributions.  See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding.  A decrease in deferred fuel cost collections, a $42 million increase in incentive compensation payments, which occur annually in the first quarter, and the decrease in Entergy Wholesale Commodities net revenue that is discussed above also contributed to the decrease, as well as several other individually insignificant factors.

Investing Activities

Net cash used in investing activities increased by $381 million for the three months ended March 31, 2011 compared to the three months ended March 31, 2010, primarily due to:

·  
an increase in nuclear fuel purchases, as more plants were preparing for refueling outages in the spring 2011 than in the spring 2010;
·  
a change in collateral deposit activity, as Entergy received deposits from Entergy Wholesale Commodities’ counterparties during 2010 and made a small amount of collateral deposits in 2011.  Entergy Wholesale Commodities’ forward sales contracts are discussed in the Market and Credit Risk Sensitive Instruments section below; and
·  
an increase in construction expenditures, primarily in the Utility business.  Entergy's construction spending plans for 2011 through 2013 are discussed in the Form 10-K.
 
 
7
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Financing Activities

Financing activities provided $6 million of cash for the three months ended March 31, 2011 compared to using $212 million of cash for the three months ended March 31, 2010 primarily because long-term debt activity provided approximately $133 million of cash in 2011 and used approximately $58 million of cash in 2010. For details of Entergy's long-term debt activity in 2011 see Note 4 to the financial statements herein.  In addition the Entergy Gulf States Louisiana and Entergy Louisiana nuclear fuel company variable interest entities borrowed on their credit facilities to finance nuclear fuel acquisitions in the first quarter 2011.  Offsetting these increases in sources of cash, Entergy repurchased $54 million of its common stock in the first quarter 2011 and none in the first quarter 2010.  Entergy’s share repurchase programs are discussed in the Form 10-K.

Rate, Cost-recovery, and Other Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation" in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.

State and Local Rate Regulation and Fuel-Cost Recovery

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.

On May 2, 2011, Entergy Louisiana made a special formula rate plan rate implementation filing with the LPSC that implements effective with the May 2011 billing cycle a $43.1 million net rate increase to reflect adjustments in accordance with a previous LPSC order relating to acquisition of Unit 2 of the Acadia Energy Center.  The net rate increase represents the decrease in the additional capacity revenue requirement resulting from the termination of the power purchase agreement with Acadia and the increase in the revenue requirement resulting from the ownership of the Acadia facility.

Federal Regulation

See the Form 10-K for a discussion of federal regulatory proceedings.  Following are updates to that discussion.

System Agreement and Independent Coordinator of Transmission (ICT)

As discussed in the Form 10-K, in November 2010 the FERC issued an order accepting the Utility operating companies’ proposal to extend the ICT arrangement with SPP by an additional term of two years, providing time for analysis of longer term structures.  In addition, in December 2010 the FERC issued an order that granted the Entergy Regional State Committee (E-RSC) additional authority over transmission upgrades and cost allocation.  The E-RSC, comprised of one representative from each of the Utility operating company retail regulators, was formed in 2009 to consider several of the issues related to the Entergy transmission system.  The Utility operating companies expect that the E-RSC will review the cost-benefit analysis the Utility operating companies will submit in May 2011 to each of their respective retail regulators comparing the ICT arrangement to joining the SPP RTO or MISO.
 
 
8
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis


Also as discussed in the Form 10-K, in February 2010 the APSC issued a show cause order opening an inquiry to conduct an investigation regarding the prudence of Entergy Arkansas’s entering a successor pooling agreement with the other Entergy Utility operating companies, as opposed to becoming a standalone entity upon exit from the System Agreement in December 2013, and whether Entergy Arkansas, as a standalone utility, should join the SPP RTO.  The APSC subsequently added evaluation of Entergy Arkansas joining MISO on a standalone basis as an alternative to be considered.  In August 2010, the APSC directed Entergy Arkansas and all parties to compare five strategic options at the same time as follows: (1) Entergy Arkansas Self-Provide; (2) Entergy Arkansas with 3rd party coordination agreements; (3) Successor Arrangements; (4) Entergy Arkansas as a standalone member of SPP RTO; and (5) Entergy Arkansas as a standalone member of MISO.
 
On April 25, 2011, Entergy announced that it proposes joining a regional transmission organization.  After comprehensive review and analysis, Entergy concluded that joining the Midwest Independent Transmission System Operator (MISO) will provide meaningful long-term benefits for the customers of the Utility operating companies.  The Utility operating companies will provide analysis in May 2011 to their retail regulators supporting these conclusions.  Entergy Arkansas’s analysis filing is due May 12, 2011, and the APSC’s procedural schedule includes an evidentiary hearing scheduled for September 7, 2011.  The Utility operating companies also expect to make filings in the third quarter 2011 with their retail regulators regarding the transfer of control of their transmission assets to MISO.  The target implementation date for joining MISO is December 2013.

Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As discussed more fully in the Form 10-K, the sale of electricity from the power generation plants owned by Entergy Wholesale Commodities, unless otherwise contracted, is subject to the fluctuation of market power prices.  Following is an updated summary of the amount of Entergy Wholesale Commodities nuclear power plants’ planned energy output that is sold forward as of March 31, 2011 under physical or financial contracts (2011 represents the remainder of the year):

   
2011
  
2012
  
2013
  
2014
  
2015
  
                       
Percent of planned generation sold forward:
                      
Unit-contingent
  
78%
  
59%
  
36%
  
14%
  
12%
  
     Unit-contingent with guarantee of availability (1)
  
18%
  
14%
  
6%
  
 3%
  
 3%
  
Firm LD
  
3%
  
24%
  
3%
  
8%
  
-%
  
Offsetting positions
  
(3)%
  
(10)%
  
-%
  
-%
  
-%
  
Total energy sold forward
  
96%
  
87%
  
45%
  
25%
  
15%
  
Planned generation (TWh) (2)
  
31
  
41
  
40
  
41
  
41
  
Average revenue under contract per MWh (3) (4)
  
$53
  
$49
  
$45
  
$51
  
$51
  

(1)
A sale of power on a unit-contingent basis coupled with a guarantee of availability provides for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold.  All of Entergy’s outstanding guarantees of availability provide for dollar limits on Entergy’s maximum liability under such guarantees.
(2)
Assumes license renewal for plants whose current licenses expire within five years and the continued operation of all six plants.  License renewal applications are in process for three units, as follows (with current license expirations in parentheses): Pilgrim (June 2012), Indian Point 2 (September 2013), and Indian Point 3 (December 2015).
(3)
The Vermont Yankee acquisition included a 10-year PPA under which the former owners will buy most of the power produced by the plant through March 21, 2012.  The PPA includes an adjustment clause under which the prices specified in the PPA will be adjusted downward monthly, beginning in November 2005, if power market prices drop below PPA prices, which has not happened thus far.
(4)
Average revenue under contract may fluctuate due to positive or negative basis differences, option premiums, costs to convert firm LD to unit-contingent, and other risk management costs.  Also, average revenue under contract excludes payments owed under the value sharing agreement with NYPA.
 
 
9
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Entergy estimates that a $10 per MWh change in the annual average energy price in the markets in which the Entergy Wholesale Commodities nuclear business sells power, based on March 31, 2011 market conditions, planned generation volume, and hedged position, would have a corresponding effect on pre-tax net income of $13 million in 2011.

Some of the agreements to sell the power produced by Entergy Wholesale Commodities’ nuclear power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations under the agreements.  The Entergy subsidiary is required to provide collateral based upon the difference between the current market and contracted power prices in the regions where Entergy Wholesale Commodities sells power.  The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty.  Cash and letters of credit are also acceptable forms of collateral.  At March 31, 2011, based on power prices at that time, Entergy had liquidity exposure of $26 million under the guarantees in place supporting Entergy Nuclear Power Marketing (a subsidiary in the Entergy Wholesale Commodities segment) transactions, $20 million of guarantees that support letters of credit, and $6 million of posted cash collateral to the ISOs.  As of March 31, 2011, the credit exposure associated with Entergy Wholesale Commodities assurance requirements would increase by $97 million for a $1 per MMBtu increase in gas prices in both the short-and long-term markets.   In the event of a decrease in Entergy Corporation's credit rating to below investment grade, based on power prices as of March 31, 2011, Entergy would have been required to provide approximately $70 million of additional cash or letters of credit under some of the agreements.

As of March 31, 2011, the counterparties or their guarantors for 99.8% of the planned energy output under contract for Entergy Wholesale Commodities through 2015 have public investment grade credit ratings and 0.2% is with load-serving entities without public credit ratings.

In addition to selling the power produced by its plants, Entergy Wholesale Commodities sells unforced capacity to load-serving distribution companies in order for those companies to meet requirements placed on them by the ISO in their area.  Following is a summary of the amount of the Entergy Wholesale Commodities nuclear plants’ installed capacity that is currently sold forward, and the blended amount of Entergy Wholesale Commodities nuclear plants’ planned generation output and installed capacity that is sold forward as of March 31, 2011 (2011 represents the remainder of the year):

   
2011
  
2012
  
2013
  
2014
  
2015
  
                       
Percent of capacity sold forward:
                      
Bundled capacity and energy contracts
  
25%
  
18%
  
16%
  
16%
  
16%
  
Capacity contracts
  
31%
  
30%
  
26%
  
10%
  
 -%
  
Total capacity sold forward
  
56%
  
48%
  
42%
  
26%
  
16%
  
Planned net MW in operation
  
4,998
  
4,998
  
4,998
  
4,998
  
4,998
  
Average revenue under contract per kW per month
(applies to capacity contracts only)
  
$2.7
  
$2.9
  
$3.1
  
$3.5
  
N/A
  
 
Blended Capacity and Energy Recap (based on revenues)
                      
% of planned generation and capacity sold forward
  
96%
  
87%
  
43%
  
25%
  
14%
  
Average revenue under contract per MWh
  
$54
  
$51
  
$48
  
$53
  
$52
  



 
10
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 
Nuclear Matters

After the nuclear incident in Japan resulting from the March 2011 earthquake and tsunami, the NRC has established a task force to conduct a review of processes and regulations relating to nuclear facilities in the United States.  The lessons learned from the events in Japan and the NRC review may affect future operations of U.S. nuclear facilities, including Entergy's, and could, among other things, result in increased costs and capital requirements associated with operating Entergy's nuclear plants.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy's accounting for nuclear decommissioning costs, unbilled revenue, impairment of long-lived assets and trust fund investments, qualified pension and other postretirement benefits, and other contingencies.  Following is an update to that discussion.  For updates regarding the impairment of long-lived assets discussion concerning Vermont Yankee see Note 11 to the financial statements herein.

Nuclear Decommissioning Costs

In the first quarter 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

New Accounting Pronouncements

The accounting standard-setting process, including projects between the FASB and the International Accounting Standards Board (IASB) to converge U.S. GAAP and International Financial Reporting Standards, is ongoing and the FASB and the IASB are each currently working on several projects that have not yet resulted in final pronouncements.  Final pronouncements that result from these projects could have a material effect on Entergy’s future net income or financial position.


 
 
 
 
 
 
 
 
 
 
 
(Page left blank intentionally)
 

 

 
CONSOLIDATED STATEMENTS OF INCOME
  
For the Three Months Ended March 31, 2011 and 2010
  
(Unaudited)
  
   
2011
    
2010
  
   
(In Thousands, Except Share Data)
  
             
OPERATING REVENUES
            
Electric
   $ 1,865,899     $ 2,006,931  
Natural gas
     71,123       96,027  
Competitive businesses
     604,186       656,389  
TOTAL
     2,541,208       2,759,347  
                 
OPERATING EXPENSES
                
Operating and Maintenance:
                
   Fuel, fuel-related expenses, and
                
     gas purchased for resale
     507,693       558,668  
   Purchased power
     362,618       474,903  
   Nuclear refueling outage expenses
     63,985       62,289  
   Other operation and maintenance
     655,748       702,489  
Decommissioning
     55,265       51,576  
Taxes other than income taxes
     125,234       135,412  
Depreciation and amortization
     264,885       269,204  
Other regulatory charges (credits) - net
     (5,111 )     28,092  
TOTAL
     2,030,317       2,282,633  
                 
OPERATING INCOME
     510,891       476,714  
                 
OTHER INCOME
                
Allowance for equity funds used during construction
     17,289       13,296  
Interest and investment income
     26,747       48,209  
Miscellaneous - net
     (9,399 )     (522 )
TOTAL
     34,637       60,983  
                 
INTEREST EXPENSE
                
Interest expense
     136,134       179,199  
Allowance for borrowed funds used during construction
     (8,534 )     (8,001 )
TOTAL
     127,600       171,198  
                 
INCOME BEFORE INCOME TAXES
     417,928       366,499  
                 
Income taxes
     164,250       147,685  
                 
CONSOLIDATED NET INCOME
     253,678       218,814  
                 
Preferred dividend requirements of subsidiaries
     5,015       5,015  
                 
NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION
   $ 248,663     $ 213,799  
                 
                 
Earnings per average common share:
                
    Basic
   $ 1.39     $ 1.13  
    Diluted
   $ 1.38     $ 1.12  
Dividends declared per common share
   $ 0.83     $ 0.75  
                 
Basic average number of common shares outstanding
     178,834,342       189,202,684  
Diluted average number of common shares outstanding
     180,083,830       191,283,703  
                 
See Notes to Financial Statements.
                
 

 

 
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
For the Three Months Ended March 31, 2011 and 2010
  
(Unaudited)
  
   
2011
    
2010
  
   
(In Thousands)
  
             
OPERATING ACTIVITIES
            
Consolidated net income
   $ 253,678     $ 218,814  
Adjustments to reconcile consolidated net income to net cash flow
                
 provided by operating activities:
                
  Depreciation, amortization, and decommissioning, including nuclear fuel amortization
     422,411       423,432  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
     173,784       133,533  
  Changes in working capital:
                
     Receivables
     102,711       43,830  
     Fuel inventory
     (12,508 )     (6,324 )
     Accounts payable
     (154,398 )     (79,250 )
     Prepaid taxes and taxes accrued
     (63,918 )     (15,038 )
     Interest accrued
     (67,978 )     (36,676 )
     Deferred fuel
     (66,548 )     964  
     Other working capital accounts
     (102,294 )     34,565  
  Changes in provisions for estimated losses
     (779 )     (35,870 )
  Changes in other regulatory assets
     48,889       (66,248 )
  Changes in pensions and other postretirement liabilities
     (190,958 )     (40,884 )
  Other
     (18,991 )     99,417  
Net cash flow provided by operating activities
     323,101       674,265  
                 
  INVESTING ACTIVITIES
                
Construction/capital expenditures
     (486,561 )     (447,476 )
Allowance for equity funds used during construction
     17,289       13,296  
Nuclear fuel purchases
     (300,975 )     (65,336 )
Proceeds from sale of assets and businesses
     -       9,675  
Changes in securitization account
     6,360       (21,940 )
NYPA value sharing payment
     (72,000 )     (72,000 )
Payments to storm reserve escrow account
     (1,736 )     (1,609 )
Receipts from storm reserve escrow account
     -       9,925  
Decrease (increase) in other investments
     (21,212 )     88,100  
Proceeds from nuclear decommissioning trust fund sales
     492,682       770,781  
Investment in nuclear decommissioning trust funds
     (530,672 )     (798,864 )
Net cash flow used in investing activities
     (896,825 )     (515,448 )
                 
See Notes to Financial Statements.
                


 

ENTERGY CORPORATION AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
For the Three Months Ended March 31, 2011 and 2010
  
(Unaudited)
  
   
2011
    
2010
  
   
(In Thousands)
  
             
FINANCING ACTIVITIES
            
Proceeds from the issuance of:
            
  Long-term debt
     411,444       42,545  
  Common stock and treasury stock
     12,280       6,078  
Retirement of long-term debt
     (278,084 )     (100,289 )
Repurchase of common stock
     (54,404 )     -  
Changes in credit borrowings - net
     68,244       (13,368 )
Dividends paid:
                
  Common stock
     (148,678 )     (141,892 )
  Preferred stock
     (5,015 )     (5,015 )
Net cash flow provided by (used in) financing activities
     5,787       (211,941 )
                 
Effect of exchange rates on cash and cash equivalents
     (298 )     607  
                 
Net decrease in cash and cash equivalents
     (568,235 )     (52,517 )
                 
Cash and cash equivalents at beginning of period
     1,294,472       1,709,551  
                 
Cash and cash equivalents at end of period
   $ 726,237     $ 1,657,034  
                 
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                
  Cash paid (received) during the period for:
                
    Interest - net of amount capitalized
   $ 164,563     $ 130,371  
    Income taxes
   $ (4,380 )   $ (1,385 )
                 
                 
See Notes to Financial Statements.
                
 

 

 
CONSOLIDATED BALANCE SHEETS
  
ASSETS
  
March 31, 2011 and December 31, 2010
  
(Unaudited)
  
             
   
2011
    
2010
  
   
(In Thousands)
  
             
CURRENT ASSETS
            
Cash and cash equivalents:
            
  Cash
   $ 103,797     $ 76,290  
  Temporary cash investments
     622,440       1,218,182  
     Total cash and cash equivalents
     726,237       1,294,472  
Securitization recovery trust account
     36,684       43,044  
Accounts receivable:
                
  Customer
     557,102       602,796  
  Allowance for doubtful accounts
     (30,754 )     (31,777 )
  Other
     141,294       161,662  
  Accrued unbilled revenues
     264,495       302,901  
     Total accounts receivable
     932,137       1,035,582  
Deferred fuel costs
     52,150       64,659  
Accumulated deferred income taxes
     9,301       8,472  
Fuel inventory - at average cost
     220,028       207,520  
Materials and supplies - at average cost
     866,598       866,908  
Deferred nuclear refueling outage costs
     263,301       218,423  
System agreement cost equalization
     52,160       52,160  
Prepaid taxes
     365,725       301,807  
Prepayments and other
     253,265       246,036  
TOTAL
     3,777,586       4,339,083  
                 
OTHER PROPERTY AND INVESTMENTS
                
Investment in affiliates - at equity
     40,171       40,697  
Decommissioning trust funds
     3,733,078       3,595,716  
Non-utility property - at cost (less accumulated depreciation)
     260,133       257,847  
Other
     408,933       405,946  
TOTAL
     4,442,315       4,300,206  
                 
PROPERTY, PLANT AND EQUIPMENT
                
Electric
     37,449,490       37,153,061  
Property under capital lease
     796,566       800,078  
Natural gas
     334,766       330,608  
Construction work in progress
     1,764,437       1,661,560  
Nuclear fuel
     1,532,579       1,377,962  
TOTAL PROPERTY, PLANT AND EQUIPMENT
     41,877,838       41,323,269  
Less - accumulated depreciation and amortization
     17,682,149       17,474,914  
PROPERTY, PLANT AND EQUIPMENT - NET
     24,195,689       23,848,355  
                 
DEFERRED DEBITS AND OTHER ASSETS
                
Regulatory assets:
                
  Regulatory asset for income taxes - net
     839,752       845,725  
  Other regulatory assets (includes securitization property of
                
     $867,105 as of March 31, 2011 and $882,346 as of
                
     December 31, 2010)
     3,768,072       3,838,237  
  Deferred fuel costs
     172,202       172,202  
Goodwill
     377,172       377,172  
Accumulated deferred income taxes
     74,271       54,523  
Other
     951,507       909,773  
TOTAL
     6,182,976       6,197,632  
                 
TOTAL ASSETS
   $ 38,598,566     $ 38,685,276  
                 
See Notes to Financial Statements.
                
 


 
ENTERGY CORPORATION AND SUBSIDIARIES
  
CONSOLIDATED BALANCE SHEETS
  
LIABILITIES AND EQUITY
  
March 31, 2011 and December 31, 2010
  
(Unaudited)
  
             
   
2011
    
2010
  
   
(In Thousands)
  
             
CURRENT LIABILITIES
            
Currently maturing long-term debt
   $ 208,655     $ 299,548  
Notes payable
     183,079       154,135  
Accounts payable
     986,307       1,181,099  
Customer deposits
     340,279       335,058  
Accumulated deferred income taxes
     68,570       49,307  
Interest accrued
     149,707       217,685  
Deferred fuel costs
     87,351       166,409  
Obligations under capital leases
     3,461       3,388  
Pension and other postretirement liabilities
     39,897       39,862  
System agreement cost equalization
     52,160       52,160  
Other
     191,278       277,598  
TOTAL
     2,310,744       2,776,249  
                 
NON-CURRENT LIABILITIES
                
Accumulated deferred income taxes and taxes accrued
     8,759,164       8,573,646  
Accumulated deferred investment tax credits
     288,591       292,330  
Obligations under capital leases
     41,187       42,078  
Other regulatory liabilities
     605,940       539,026  
Decommissioning and asset retirement cost liabilities
     3,164,406       3,148,479  
Accumulated provisions
     394,985       395,250  
Pension and other postretirement liabilities
     1,984,371       2,175,364  
Long-term debt (includes securitization bonds of $910,053 as of
                
   March 31, 2011 and $931,131 as of December 31, 2010)
     11,581,318       11,317,157  
Other
     621,980       618,559  
TOTAL
     27,441,942       27,101,889  
                 
Commitments and Contingencies
                
                 
Subsidiaries' preferred stock without sinking fund
     216,742       216,738  
                 
EQUITY
                
Common Shareholders' Equity:
                
Common stock, $.01 par value, authorized 500,000,000 shares;
                
  issued 254,752,788 shares in 2011 and in 2010
     2,548       2,548  
Paid-in capital
     5,366,518       5,367,474  
Retained earnings
     8,789,534       8,689,401  
Accumulated other comprehensive loss
     (67,177 )     (38,212 )
Less - treasury stock, at cost (76,484,580 shares in 2011 and
                
  76,006,920 shares in 2010)
     5,556,285       5,524,811  
Total common shareholders' equity
     8,535,138       8,496,400  
Subsidiaries' preferred stock without sinking fund
     94,000       94,000  
TOTAL
     8,629,138       8,590,400  
                 
TOTAL LIABILITIES AND EQUITY
   $ 38,598,566     $ 38,685,276  
                 
See Notes to Financial Statements.
                
 


 
 
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND COMPREHENSIVE INCOME
  
For the Three Months Ended March 31, 2011 and 2010
  
(Unaudited) (In Thousands)
  
                                           
         
Common Shareholders' Equity
        
   
Subsidiaries' Preferred Stock
    
Common Stock
    
Treasury Stock
    
Paid-in Capital
    
Retained Earnings
    
Accumulated Other Comprehensive Income (Loss)
    
Total
  
Balance at December 31, 2009
   $ 94,000     $ 2,548     $ (4,727,167 )   $ 5,370,042     $ 8,043,122     $ (75,185 )   $ 8,707,360  
                                                         
Consolidated net income (a)
     5,015       -       -       -       213,799       -       218,814  
Other comprehensive income:
                                                        
    Cash flow hedges net unrealized
     gain (net of tax expense of
     $87,259)
     -       -       -       -       -       142,538       142,538  
    Pension and other postretirement
     liabilities (net of tax expense of
     $891)
     -       -       -       -       -       1,805       1,805  
    Net unrealized investment gains
     (net of tax expense of $17,813)
     -       -       -       -       -       16,841       16,841  
    Foreign currency translation (net
     of tax benefit of $327)
     -       -       -       -       -       (607 )     (607 )
        Total comprehensive income
                                                     379,391  
                                                         
Common stock issuances related to
  stock plans
     -       -       10,872       3,382       -       -       14,254  
Common stock dividends declared
     -       -       -       -       (141,911 )     -       (141,911 )
Preferred dividend requirements of
  subsidiaries (a)
     (5,015 )     -       -       -       -       -       (5,015 )
                                                         
Balance at March 31, 2010
   $ 94,000     $ 2,548     $ (4,716,295 )   $ 5,373,424     $ 8,115,010     $ 85,392     $ 8,954,079  
                                                         
                                                         
Balance at December 31, 2010
   $ 94,000     $ 2,548     $ (5,524,811 )   $ 5,367,474     $ 8,689,401     $ (38,212 )   $ 8,590,400  
                                                         
Consolidated net income (a)
     5,015       -       -       -       248,663       -       253,678  
Other comprehensive income:
                                                        
    Cash flow hedges net unrealized
     loss (net of tax benefit of $34,635)
     -       -       -       -       -       (58,208 )     (58,208 )
    Pension and other postretirement
     liabilities (net of tax expense of
     $1,093)
     -       -       -       -       -       4,259       4,259  
    Net unrealized investment gains
     (net of tax expense of $25,340)
     -       -       -       -       -       24,685       24,685  
    Foreign currency translation (net
     of tax expense of $161)
     -       -       -       -       -       299       299  
        Total comprehensive income
                                                     224,713  
                                                         
Common stock repurchases
     -       -       (54,404 )     -       -       -       (54,404 )
Common stock issuances related to 
  stock plans
     -       -       22,930       (956 )     -       -       21,974  
Common stock dividends declared
     -       -       -       -       (148,530 )     -       (148,530 )
Preferred dividend requirements of
  subsidiaries (a)
     (5,015 )     -       -       -       -       -       (5,015 )
                                                         
Balance at March 31, 2011
   $ 94,000     $ 2,548     $ (5,556,285 )   $ 5,366,518     $ 8,789,534     $ (67,177 )   $ 8,629,138  
                                                         
See Notes to Financial Statements.
                                                        
                                                         
(a) Consolidated net income and preferred dividend requirements of subsidiaries for both 2010 and 2011 include $3.3 million of preferred dividends on subsidiaries' preferred stock without sinking fund that is not presented as equity.
  
                                                         
                                                         
 
 

 
 
SELECTED OPERATING RESULTS
  
For the Three Months Ended March 31, 2011 and 2010
  
(Unaudited)
  
                         
                         
               
Increase/
        
Description
  
2011
    
2010
    
(Decrease)
    
%
  
   
(Dollars in Millions)
        
Utility Electric Operating Revenues:
                        
  Residential
   $ 748     $ 818     $ (70 )     (9 )
  Commercial
     501       526       (25 )     (5 )
  Industrial
     479       521       (42 )     (8 )
  Governmental
     47       50       (3 )     (6 )
    Total retail
     1,775       1,915       (140 )     (7 )
  Sales for resale
     64       83       (19 )     (23 )
  Other
     27       9       18       200  
    Total
   $ 1,866     $ 2,007     $ (141 )     (7 )
                                 
Utility Billed Electric Energy
                                
 Sales (GWh):
                                
  Residential
     9,042       9,645       (603 )     (6 )
  Commercial
     6,449       6,472       (23 )     -  
  Industrial
     9,516       8,733       783       9  
  Governmental
     583       592       (9 )     (2 )
    Total retail
     25,590       25,442       148       1  
  Sales for resale
     947       1,317       (370 )     (28 )
    Total
     26,537       26,759       (222 )     (1 )
                                 
                                 
Competitive Business:
                                
Operating Revenues
   $ 604     $ 656     $ (52 )     (8 )
Billed Electric Energy Sales (GWh)
     10,519       11,128       (609 )     (5 )
                                 
                                 
                                 
                                 
 
 
 

E